⁠Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $VEEV 🧘🏽‍♂️

•NTM P/E Ratio: 36.18x
•1-Year Mean: 33.74x

•NTM FCF Yield: 3.00%
•1-Year Mean: 3.28%

As you can see, $VEEV appears to be trading near fair value

Going forward, investors can receive ~7% LESS in earnings per share & ~8% LESS in FCF per share 🧠***

Before we get into valuation, let’s take a look at why $VEEV is a great business

BALANCE SHEET✅
•Cash & Short-Term Inv: $4.89B
•Long-Term Debt: $0

$VEEV has a great balance sheet) & an 18x FFO Interest Coverage

RETURN ON CAPITAL✅ / 🆗
•2019: 17.9%
•2020: 16.6%
•2021: 16.2%
•2022: 17.0%
•2023: 12.1%
•2024: 9.1%
•LTM: 11.3%

RETURN ON EQUITY✅
•2019: 21.4%
•2020: 20.7%
•2021: 19.3%
•2022: 16.5%
•2023: 14.7%
•2024: 12.6%
•LTM: 13.2%

$VEEV has decent return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2019: $0.86B
•2024: $2.36B
•CAGR: 22.37%

FREE CASH FLOW✅
•2019: $301.01M
•2024: $885.14M
•CAGR: 24.07%

NORMALIZED EPS✅
•2019: $1.63
•2024: $4.84
•CAGR: 24.31%

SHARE BUYBACKS❌
•2019 Shares Outstanding: 156.12M
•LTM Shares Outstanding: 164.24M

MARGINS✅
•LTM Gross Margins: 73.4%
•LTM Operating Margins: 22.9%
•LTM Net Income Margins: 23.9%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~7% LESS in EPS & ~8% LESS in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $VEEV has to grow earnings at an 18.09% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2026 - 2027 EPS growth over the next few years to be less than the (18.09%) required growth rate:

2025E: $6.24 (28.9% YoY) *FY Jan 2025

2026E: $6.82 (9.3% YoY)
2027E: $7.57 (11.0% YoY)

$VEEV has an excellent track record of meeting analyst estimates ~2 years out, so let’s assume $VEEV ends 2027 with $7.57 in EPS & see its CAGR potential assuming different multiples

38x P/E: $287.66💵 … ~9.9% CAGR

36x P/E: $272.52💵 … ~7.3% CAGR

34x P/E: $257.38💵 … ~4.5% CAGR

32x P/E: $242.24💵 … ~1.7% CAGR

As you can see, $VEEV appears to have attractive return potential IF we assume >38x earnings (a multiple not justified by its growth rate)

From 2016 - 2024, $VEEV delivered impressive EPS growth, with a 32.48% CAGR … this is why it made sense for the businesses to trade for 40x - 60x during those years

As we’ve recently seen, $VEEV has been re-rated (due to slowing growth) and it is still trading for a demanding valuation today

Today at $233💵 $VEEV does not appear to be a good consideration for investment

I’d start to get interested in $VEEV closer to $180💵 (23% below today’s price) where I can reasonably expect ~11% CAGR while assuming a 30x end multiple, ensuring some margin of safety

#stocks #investing
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𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.

𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.

𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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⁠Dimitry Nakhla | Babylon Capital®
“I guess when this happens … ” $SMCI 📈📉

#stocks #investing https://t.co/RSalrvNmKt
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⁠Quiver Quantitative
RT @InsiderRadar: $OSCR is up 13% at open, an immediate response to this insider buy

🚨 JUST IN: Massive New Insider Purchase

Joshua Kushner, a co-founder at $OSCR, just reported the purchase of ~$14.4M of the company's stock.

Kushner is also the founder of Thrive Capital, and is the brother of Jared Kushner (Donald Trump's son-in-law and fmr. advisor). https://t.co/uGiDd53OTZ - Insider Radar
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⁠Quiver Quantitative
ANOTHER politician just disclosed a purchase of Tesla stock, made before the election.

Representative Morgan McGarvey just revealed that he bought up to $15K on October 25th.

$TSLA has now risen 22% since then. https://t.co/Syy8e6EAZU
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⁠App Economy Insights
$DIS Disney Q4 FY24 (ending in Sept):

• Revenue +6% Y/Y to $22.6B ($80M beat).
• Non-GAAP EPS $1.14 ($0.03 beat).

Segment operating margin:
🍿 Entertainment: 10% (+7pp Y/Y).
🏈 Sports: 24% (-1pp Y/Y).
🏰 Experience: 20% (-2pp Y/Y).

FY25 EPS growth high single digit. https://t.co/hBi5LU2Jx1
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⁠Stock Analysis Compilation
Maran Partners on Clarus $CLAR US

Thesis: With a large cash balance, zero debt, and undervalued strong brands, Clarus presents an asymmetric investment opportunity, trading at a deep discount despite significant hidden private market value

(Extract from their Q3 letter) https://t.co/0U2QO7iWbz
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⁠Startup Archive
Mark Zuckerberg: “You can’t 80/20 everything”

When Facebook first launched, a user’s profile included things like the dorm they lived in and the courses they were taking.

Paul Graham asks Mark if he thinks Facebook would’ve worked without these features, to which Mark replies:

“I remember this early debate that Dustin [Moskovitz] and I had where we had to do some manual work for every school that we released Facebook at. To do that, we went through and parsed the course catalogs at the schools to make sure that the data was clean.”

Dustin argued that it would be easier to launch new schools if they didn’t parse these catalogs, while Mark thought this would be an unacceptable drop in quality.

“We just had this really long debate about what quality meant for us and the community that we wanted to establish and the culture. In retrospect, maybe it wouldn’t have made a huge difference in how things played out. But it definitely set this tone where there’s a lot of clean data on Facebook, you can rely on it, it feels like a college-specific thing—which was valuable early on for setting the culture.”

Mark then offers the following advice to the YC Startup School audience:

“In the projects you work on, you will have a lot of similar questions. There’s the famous 80/20 rule where you get 80% of the benefit by doing 20% of the work, but you can’t just 80/20 everything. There have to be certain things that you are just the best at and that you go way further than anyone else on to establish this quality bar and have your product be the best thing that’s out there.”

Video source: @ycombinator (2012)
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